Nike posts bigger-than-expected quarterly sales drop on weak China demand

(Reuters) – Nike (NYSE:) posted a bigger-than-expected drop in first-quarter revenue on Tuesday, as the sportswear giant battles weak demand in key market China and faces stiff competition from newer brands globally.

The sportswear giant has been hurt by a lull in consumer spending in China after a frail post-pandemic recovery driven by high youth unemployment and a protracted property downturn. Consumers in the region have also begun preferring locally made products.

Nike is yet to see sales benefits from its drive to fast-track innovation with the launch of new product lines such as Air Max Dn and Pegasus 41.

Analysts say the company has done little to drive demand and take back market share from brands like Deckers’ Hoka and Roger Federer-backed On. The company’s first-quarter net revenue fell to $11.59 billion from $12.94 billion a year earlier. Analysts had expected a 10% fall to $11.65 billion, according to analysts’ estimates compiled by LSEG.